001-35777
|
45-3449660
|
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
1345 Avenue of the Americas, 45th Floor
New York, New York |
10105
|
|
(Address of principal executive offices)
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(Zip Code)
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☐
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
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Results of Operations and Financial Condition.
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Item 9.01
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Financial Statements and Exhibits.
|
(d)
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Exhibits
|
Exhibit
Number |
Description
|
|
Press release, dated February 13, 2018, issued by New Residential Investment Corp.
|
NEW RESIDENTIAL INVESTMENT CORP.
|
|
(Registrant)
|
|
/s/ Nicola Santoro, Jr.
|
|
Nicola Santoro, Jr.
|
|
Chief Financial Officer
|
§
|
GAAP Net Income of $288 million, or $0.93 per diluted share
|
§
|
Core Earnings of $189 million, or $0.61 per diluted share*
|
§
|
Common dividend of $154 million, or $0.50 per share
|
§
|
GAAP Net Income of $958 million, or $3.15 per diluted share
|
§
|
Core Earnings of $861 million, or $2.83 per diluted share*
|
§
|
Common dividend of $609 million, or $1.98 per share
|
4Q 2017
|
3Q 2017
|
Year Ended
December 31, 2017 |
Year Ended
December 31, 2016 |
||||
Summary Operating Results:
|
|||||||
GAAP Net Income per Diluted Share**
|
$0.93
|
$0.73
|
$3.15
|
$2.12
|
|||
GAAP Net Income
|
$288 million
|
$226 million
|
$958 million
|
$504 million
|
|||
Non-GAAP Results:
|
|||||||
Core Earnings per Diluted Share**
|
$0.61
|
$0.64
|
$2.83
|
$2.14
|
|||
Core Earnings*
|
$189 million
|
$199 million
|
$861 million
|
$511 million
|
|||
NRZ Common Dividend:
|
|||||||
Common Dividend per Share**
|
$0.50
|
$0.50
|
$1.98
|
$1.84
|
|||
Common Dividend
|
$154 million
|
$154 million
|
$609 million
|
$443 million
|
w
|
Acquisition of Shellpoint Partners -
|
§
|
On November 29, 2017, New Residential announced definitive agreements to acquire Shellpoint Partners LLC (“Shellpoint”), a vertically integrated mortgage platform with established origination and servicing capabilities, for approximately $190 million, net of financing. (1) As part of the acquisition, New Residential purchased and settled on approximately $8 billion UPB of Fannie Mae and Freddie Mac MSRs from Shellpoint in January 2018. The corporate acquisition is expected to close in the first half of 2018, subject to receipt of regulatory approvals and certain third party consents and satisfaction of certain other closing conditions.
|
w
|
Mortgage Servicing Rights (“MSRs”) -
|
§
|
During and subsequent to fourth quarter 2017, New Residential acquired or agreed to acquire MSRs totaling approximately $32 billion UPB for an aggregate purchase price of approximately $307 million. In addition, to further enhance liquidity, NRZ priced two fixed rate MSR notes in January and February 2018, totaling $930 million, at a weighted average cost of funds of ~3.6%.
|
§
|
In January 2018, as part of the Company’s previously announced MSR transfer agreement with Ocwen Financial Corporation (“Ocwen”)(2), New Residential paid Ocwen an approximately $280 million restructuring fee to obtain the remaining rights to MSRs on the legacy Non-Agency MSR portfolio totaling $87 billion UPB. (3) Under the New RMSR Agreement, Ocwen will transfer the remaining $87 billion UPB Non-Agency MSRs (3) to New Residential.
|
w
|
Non-Agency Securities & Call Rights -
|
§
|
During the fourth quarter, New Residential continued to accelerate the execution around its deal collapse strategy by executing clean-up calls on 36 seasoned, Non-Agency residential mortgage-backed securities (“RMBS”) deals with an aggregate UPB of approximately $1 billion. In addition, subsequent to the fourth quarter, New Residential completed a $727 million Non-Agency loan securitization.
|
§
|
In the fourth quarter, New Residential continued to strategically invest in Non-Agency securities that are expected to be accretive to the Company’s call rights strategy. New Residential purchased $882 million face value of Non-Agency RMBS, bringing net equity to approximately $1.4 billion as of December 31, 2017.
|
w
|
Servicer Advances -
|
§
|
New Residential continued to focus on lowering advance balances during the quarter. Advances declined to $4.1 billion in the fourth quarter, down approximately 31% year-over-year.
|
(1)
|
Shellpoint total purchase price is subject to certain adjustments, plus potential additional consideration pursuant to a three-year earnout based on the performance of Shellpoint after closing.
|
(2)
|
In July 2017, New Residential and Ocwen signed definitive agreements for the transfer of Ocwen’s interest in MSRs and subservicing relating to approximately $110 billion UPB (balance as of June 30, 2017) of Non-Agency MSRs. In January 2018, New Residential and Ocwen entered into new agreements (“New RMSR Agreement”), which accelerated certain parts of the July 2017 agreements, including, but not limited to, lump sum payments made by New Residential to Ocwen while the companies continue to obtain the third party consents necessary to transfer the MSRs from Ocwen to New Residential.
|
(3)
|
In the third quarter of 2017, New Residential paid Ocwen $55 million in restructuring fees for approximately $16 billion UPB of MSRs. Total portfolio UPB decreased from $110 billion to $87 billion prior to entering into the New RMSR Agreement as a result of amortization and the transfer of such MSRs.
|
|
Year Ended December 31,
|
|||||||||||
|
2017
|
2016
|
2015
|
|||||||||
|
(unaudited)
|
|||||||||||
|
||||||||||||
Interest income
|
$
|
1,519,679
|
$
|
1,076,735
|
$
|
645,072
|
||||||
Interest expense
|
460,865
|
373,424
|
274,013
|
|||||||||
Net Interest Income
|
1,058,814
|
703,311
|
371,059
|
|||||||||
|
||||||||||||
Impairment
|
||||||||||||
Other-than-temporary impairment (OTTI) on securities
|
10,334
|
10,264
|
5,788
|
|||||||||
Valuation and loss provision (reversal) on loans and real estate owned
|
75,758
|
77,716
|
18,596
|
|||||||||
|
86,092
|
87,980
|
24,384
|
|||||||||
|
||||||||||||
Net interest income after impairment
|
972,722
|
615,331
|
346,675
|
|||||||||
|
||||||||||||
Servicing revenue, net
|
424,349
|
118,169
|
—
|
|||||||||
Other Income
|
||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
4,322
|
(7,297
|
)
|
38,643
|
||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
12,617
|
16,526
|
31,160
|
|||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
66,394
|
—
|
—
|
|||||||||
Change in fair value of servicer advance investments
|
84,418
|
(7,768
|
)
|
(57,491
|
)
|
|||||||
Gain on consumer loans investment
|
—
|
9,943
|
43,954
|
|||||||||
Gain on remeasurement of consumer loans investment
|
—
|
71,250
|
—
|
|||||||||
Gain (loss) on settlement of investments, net
|
10,310
|
(48,800
|
)
|
(19,626
|
)
|
|||||||
Earnings from investments in consumer loans, equity method investees
|
25,617
|
—
|
—
|
|||||||||
Other income (loss), net
|
4,108
|
28,483
|
5,389
|
|||||||||
|
207,786
|
62,337
|
42,029
|
|||||||||
Operating Expenses
|
||||||||||||
General and administrative expenses
|
67,159
|
38,570
|
61,862
|
|||||||||
Management fee to affiliate
|
55,634
|
41,610
|
33,475
|
|||||||||
Incentive compensation to affiliate
|
81,373
|
42,197
|
16,017
|
|||||||||
Loan servicing expense
|
52,330
|
44,001
|
6,469
|
|||||||||
Subservicing expense
|
166,081
|
7,832
|
—
|
|||||||||
|
422,577
|
174,210
|
117,823
|
|||||||||
|
||||||||||||
Income Before Income Taxes
|
1,182,280
|
621,627
|
270,881
|
|||||||||
Income tax expense (benefit)
|
167,628
|
38,911
|
(11,001
|
)
|
||||||||
Net Income
|
$
|
1,014,652
|
$
|
582,716
|
$
|
281,882
|
||||||
Noncontrolling Interests in Income of Consolidated Subsidiaries
|
$
|
57,119
|
$
|
78,263
|
$
|
13,246
|
||||||
Net Income Attributable to Common Stockholders
|
$
|
957,533
|
$
|
504,453
|
$
|
268,636
|
||||||
|
||||||||||||
Net Income Per Share of Common Stock
|
||||||||||||
Basic
|
$
|
3.17
|
$
|
2.12
|
$
|
1.34
|
||||||
Diluted
|
$
|
3.15
|
$
|
2.12
|
$
|
1.32
|
||||||
|
||||||||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||
Basic
|
302,238,065
|
238,122,665
|
200,739,809
|
|||||||||
Diluted
|
304,381,388
|
238,486,772
|
202,907,605
|
|||||||||
|
||||||||||||
Dividends Declared per Share of Common Stock
|
$
|
1.98
|
$
|
1.84
|
$
|
1.75
|
|
December 31, 2017
|
December 31, 2016
|
||||||
Assets
|
(unaudited)
|
|||||||
Investments in:
|
||||||||
Excess mortgage servicing rights, at fair value
|
$
|
1,173,713
|
$
|
1,399,455
|
||||
Excess mortgage servicing rights, equity method investees, at fair value
|
171,765
|
194,788
|
||||||
Mortgage servicing rights, at fair value
|
1,735,504
|
659,483
|
||||||
Mortgage servicing rights financing receivables, at fair value
|
598,728
|
—
|
||||||
Servicer advance investments, at fair value
|
4,027,379
|
5,706,593
|
||||||
Real estate and other securities, available-for-sale
|
8,071,140
|
5,073,858
|
||||||
Residential mortgage loans, held-for-investment
|
691,155
|
190,761
|
||||||
Residential mortgage loans, held-for-sale
|
1,725,534
|
696,665
|
||||||
Real estate owned
|
128,295
|
59,591
|
||||||
Consumer loans, held-for-investment
|
1,374,263
|
1,799,486
|
||||||
Consumer loans, equity method investees
|
51,412
|
—
|
||||||
Cash and cash equivalents
|
295,798
|
290,602
|
||||||
Restricted cash
|
150,252
|
163,095
|
||||||
Servicer advances receivable
|
675,593
|
81,582
|
||||||
Trades receivable
|
1,030,850
|
1,687,788
|
||||||
Deferred tax asset, net
|
—
|
151,284
|
||||||
Other assets
|
312,181
|
244,498
|
||||||
|
$
|
22,213,562
|
$
|
18,399,529
|
||||
|
||||||||
Liabilities and Equity
|
||||||||
|
||||||||
Liabilities
|
||||||||
Repurchase agreements
|
$
|
8,662,139
|
$
|
5,190,631
|
||||
Notes and bonds payable
|
7,084,391
|
7,990,605
|
||||||
Trades payable
|
1,169,896
|
1,381,968
|
||||||
Due to affiliates
|
88,961
|
47,348
|
||||||
Dividends payable
|
153,681
|
115,356
|
||||||
Deferred tax liability, net
|
19,218
|
—
|
||||||
Accrued expenses and other liabilities
|
239,114
|
205,444
|
||||||
|
17,417,400
|
14,931,352
|
||||||
|
||||||||
Commitments and Contingencies
|
||||||||
|
||||||||
Equity
|
||||||||
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 307,361,309 and 250,773,117 issued and outstanding at December 31, 2017 and December 31, 2016, respectively
|
3,074
|
2,507
|
||||||
Additional paid-in capital
|
3,763,188
|
2,920,730
|
||||||
Retained earnings
|
559,476
|
210,500
|
||||||
Accumulated other comprehensive income (loss)
|
364,467
|
126,363
|
||||||
Total New Residential stockholders’ equity
|
4,690,205
|
3,260,100
|
||||||
Noncontrolling interests in equity of consolidated subsidiaries
|
105,957
|
208,077
|
||||||
Total Equity
|
4,796,162
|
3,468,177
|
||||||
|
$
|
22,213,562
|
$
|
18,399,529
|
|
Three Months Ended
|
Year Ended December 31,
|
||||||||||||||
|
December 31, 2017
|
September 30, 2017
|
2017
|
2016
|
||||||||||||
Net income attributable to common stockholders
|
$
|
288,302
|
$
|
226,121
|
$
|
957,533
|
$
|
504,453
|
||||||||
Impairment
|
11,975
|
28,209
|
86,092
|
87,980
|
||||||||||||
Other Income adjustments:
|
||||||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
(36,972
|
)
|
14,291
|
(4,322
|
)
|
7,297
|
||||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
(6,561
|
)
|
(2,054
|
)
|
(12,617
|
)
|
(16,526
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
(13,746
|
)
|
(89,115
|
)
|
(109,584
|
)
|
—
|
|||||||||
Change in fair value of servicer advance investments
|
(13,949
|
)
|
(10,941
|
)
|
(84,418
|
)
|
7,768
|
|||||||||
Gain on consumer loans investment
|
—
|
—
|
—
|
(9,943
|
)
|
|||||||||||
Gain on remeasurement of consumer loans investment
|
—
|
—
|
—
|
(71,250
|
)
|
|||||||||||
(Gain) loss on settlement of investments, net
|
(9,060
|
)
|
(1,553
|
)
|
(10,310
|
)
|
48,800
|
|||||||||
Unrealized (gain) loss on derivative instruments
|
2,066
|
(3,560
|
)
|
2,190
|
(5,774
|
)
|
||||||||||
Unrealized (gain) loss on other ABS
|
(2,543
|
)
|
(189
|
)
|
(2,883
|
)
|
2,322
|
|||||||||
(Gain) loss on transfer of loans to REO
|
(6,147
|
)
|
(5,179
|
)
|
(22,938
|
)
|
(18,356
|
)
|
||||||||
(Gain) loss on transfer of loans to other assets
|
(129
|
)
|
(66
|
)
|
(488
|
)
|
(2,938
|
)
|
||||||||
Gain on Excess MSR recapture agreements
|
(436
|
)
|
(606
|
)
|
(2,384
|
)
|
(2,802
|
)
|
||||||||
Gain (loss) on Ocwen common stock
|
1,641
|
(6,987
|
)
|
(5,346
|
)
|
—
|
||||||||||
Other (income) loss
|
9,136
|
6,700
|
27,741
|
9,437
|
||||||||||||
Total Other Income Adjustments
|
(76,700
|
)
|
(99,259
|
)
|
(225,359
|
)
|
(51,965
|
)
|
||||||||
|
||||||||||||||||
Other Income and Impairment attributable to non-controlling interests
|
(5,986
|
)
|
(6,329
|
)
|
(30,416
|
)
|
(26,303
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights
|
(78,030
|
)
|
11,518
|
(155,495
|
)
|
(103,679
|
)
|
|||||||||
Non-capitalized transaction-related expenses
|
7,326
|
6,467
|
21,723
|
9,493
|
||||||||||||
Incentive compensation to affiliate
|
9,250
|
19,491
|
81,373
|
42,197
|
||||||||||||
Deferred taxes
|
54,502
|
28,410
|
168,518
|
34,846
|
||||||||||||
Interest income on residential mortgage loans, held-for sale
|
1,554
|
4,603
|
13,623
|
18,356
|
||||||||||||
Limit on RMBS discount accretion related to called deals
|
(8,593
|
)
|
(13,543
|
)
|
(28,652
|
)
|
(30,233
|
)
|
||||||||
Adjust consumer loans to level yield
|
(17,790
|
)
|
(9,874
|
)
|
(41,250
|
)
|
7,470
|
|||||||||
Core earnings of equity method investees:
|
||||||||||||||||
Excess mortgage servicing rights
|
3,681
|
3,476
|
13,691
|
18,206
|
||||||||||||
Core Earnings
|
$
|
189,491
|
$
|
199,290
|
$
|
861,381
|
$
|
510,821
|